Capital ideas

Grocery Headquarters visited four retailers in Albany, N.Y. and observed the various ways in which they are doing business in a highly competitive market.

The Capital Region of Albany, N.Y., has seen a number of grocery retailers enter the market over the past few years. With the influx, retailers both old and new to the area are feeling the heat of the competition. In late October, Grocery Headquarters visited Albany to witness what has attracted so many retailers to the area.

“The retail landscape has changed dramatically in the last several years,” says Tim O’Brien, reporter for the Times Union, an Albany-region newspaper. “ShopRite entered the market and quickly built four stores. That’s prompted competitors to renovate their stores. Price Chopper, which is locally-based, has been renovating its stores and is creating what it says will be a next generation market in Latham. That’s meant to be a throw down to competitors.”

Grocery Headquarters visited the Latham location while in the Albany area and witnessed the renovations firsthand. The expansion will add 10,000 square feet to the store for a total of 90,000, as well as 16 eateries including an in-house cooking school and produce grown and harvested in-store. There will also be a revised pharmacy with its own outdoor entrance and a drive-up window.

“Our goal here is to create a store by which all other stores will be judged,” said Neil Golub, executive chairman of the board for parent company, The Golub Corp., in an interview with the Times Union newspaper.

“There is vigorous competition for grocery dollars and now Walmart and Target want in on the action,” O’Brien adds. Walmart recently opened a Neighborhood Market location 10 miles away in Niskayuna, N.Y.

In addition to mass merchandisers, natural retailers have come to the area to make a play for consumer dollars and loyalty. Whole Foods Market will be opening its first Upstate New York store in Colonie, N.Y. Currently under construction, the retailer is planning for a springtime opening. Trader Joe’s opened its own Colonie location last year, which is in walking distance of the planned Whole Foods site. The Fresh Market opened its only upstate location in nearby Latham in 2010.

All three are simply following the path that the Honest Weight Food Co-op paved 35 years ago when it opened to the public in 1977 as a cooperatively owned and operated natural foods grocery store for New York’s greater Capital Region. The co-op moved to a new building in June, doubling its retail space to 18,000 square feet in the process.

The vast competition in the area demands a unique approach when marketing to consumers. “Hannaford puts its emphasis on lowest daily prices, while ShopRite and Price Chopper tend to emphasize their specials. Price Chopper also heavily promotes its gas card,” O’Brien says. “Price Chopper emphasizes the fact that it’s local and family-owned. Their leaders are familiar faces in the area so they capitalize on the hometown advantage.”

Life in Albany
Albany County has a population of a little more than 305,000 people according to 2012 estimates from the U.S. Census Bureau. The median household income is estimated to be $57,715 with a per capita income of just under $32,000. From 2007 to 2011, 12.8% of residents reported to be living below the poverty level.

“I think generally the region’s population is fairly stable. One of the benefits of being in a capital region is that state governments tend not to have the dramatic job losses that can occur when a major employer decides to move elsewhere,” O’Brien says.

Albany’s economy has long been supported by the presence of the state government and institutes for higher education. In recent years, it has seen a boost from the nanotechnology sector, which has begun to call the area home.

“This region, which was dominated by government and higher education, now has a fairly large high technology sector,” says Dr. Donald Siegel, dean of the School of Business at the University at Albany. “Generally, higher education and government are two industries that are recession-proof.”

Nanotechnology has become the Capital Region’s fastest growing industry. GE Global Research calls Niskayuna home, with a 525-acre campus devoted to the research and development division of General Electric. The growth of “Tech Valley” is fostered by the rapidly growing College of NanoScale Science and Engineering at The University at Albany, as well as nearby Rensselaer Polytechnic Institute. O’Brien believes this booming industry is helping to attract new retailers to the region. “It has brought a lot of jobs to the area, as well as consumers to whom variety is very appealing.

“There’s been a substantial amount of public and private investment in nanotechnology, along with a lot of federally sponsored research. In general, the region has done very well especially compared to other parts of the state and the Northeast. It’s become an upscale area and an attractive market for retailers,” Siegel adds.

Capital Region retailers would also be wise to remember the number of Millenials in the area. With several universities and colleges in the region, the area has a constant influx of new, young shoppers and their loyalty is up for grabs. According to the Sterling-Rice Group, Millenials are expected to amplify grocery spending to $50 billion by 2020.

HBC/GM comparison
Grocery Headquarters perused the HBC and general merchandise aisles in the local Walmart, Hannaford Supermarket & Pharmacy and Price Chopper in Latham, N.Y. All are located within a half mile of each other—the Walmart and Hannaford locations are actually in the same shopping center. The East Greenbush Target in Rensselaer, 11 miles away was visited as well.

Price Chopper had its HBC department divided as a result of the renovations, with the majority of product located next to the pharmacy. Oral care, cough and cold products were left hanging next to the frozen and dairy aisles. Although all shelves were well-stocked and labeled, there was a layer of dirt and dust on shelves from the construction.

Rather than containing renovation to one area of the store at a time, the entire location was noticeably affected. Although the store’s floor plan was filled with construction zones—and changes to the shopping pattern—aisles were kept wide and clear, allowing shoppers to easily navigate. There was also plenty of signage to notify shoppers to the temporary locations of products.

An interesting addition to Target’s HBC department was the presence of products available for testing. Various body lotions, hair products and more were displayed off shelves with “Latest + Greatest” signage attached. Endcaps and displays were well organized throughout the store and heavily promoted certain brands or themes.
Hannaford’s HBC department, which occupied its own corner of the store past the checkout lanes, was very quiet and did not seem to attract much foot traffic from customers. Natural items were stocked next to conventional, with clear signage denoting their attributes.

Price Chopper and Target both provided quality customer service, with plenty of associates available to customers throughout the store. Price Chopper associates had an especially significant presence throughout the store to help customers navigate the store during the renovation. Walmart had a typical to low employee presence, while Hannaford’s employees were sparse throughout the segmented pharmacy and HBC department.